Zambia Market Update H1 2020 - Knight Frank
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Zambia Market Update H1 2020 Great East Road, Lusaka
Office Market Review–H1 2020
Lusaka Copperbelt and other towns
Office rentals in Lusaka continued to stabilize in H1 Outside of Lusaka, most cities remain significantly
2020, with Grade A and Grade B rents ranging between undersupplied with Grade A offices.
US$15 – US$18 and US$10 – US$14 per square metre,
respectively. Rentals in these towns are commonly charged in
Zambian Kwacha and can range from ZMW 50 to
The office market has remained relatively resolute so ZMW160 per square metre. The most common
far in the face of the pandemic, coming from a demand for commercial office space in these towns is
background of over supply, as office rentals adjust to in the range of 40 sqm – 100sqm.
demand over the medium to long term and landlords
and tenants renegotiate terms.
Key trends GDP and Inflation
GDP
Inflation(RHS)
Rising inflation rates and 12 30
economic uncertainty have
continued to slow major 10
25
development and 8
transactions so far this year.
6 20
Renegotiations on existing
4
office rentals for the short to 15
medium term , allowing % 2
Landlords and Tenants to
focus on the longer term 0 10
once macro economic factors
-2
improve and adjust to the 5
effects of the COVID – 19 -4
virus.
-6 0
2010
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
The IMF has forecast GDP
growth of 2.3% in 2021. EVEXIA, Church Road, Lusaka
Zambia’s First
Source: IMF, LEED
Knight Certified
Frank ResearchBuilding
Global trends on
sustainability and flexible
Prime Office Rents (US$/SQM/Month)
space have continued to
30
feature in the market with
buildings such as the ZEP –
25
RE Office Park , offering
small and larger units for
20
sale or lease and EVEXIA
building being LEED
certified. 15
There is still a strong 10
demand for converted
residential properties in 5
central areas for small office
uses , and often fixed at 0
Kwacha rentals. 2013 2014 2015 2016 2017 2018 2019 2020
Source: Knight Frank ResearchResidential Market Review –H1 2020
Lusaka Copperbelt and other towns
Overall transactions in the residential market slowed in Outside of Lusaka, an emerging trend has been the
H1 2020 as a result of the COVID-19 pandemic exerting conversion of agricultural land into serviced plots in
downward pressure on prices. This trend is set to order to facilitate self build projects.
continue in H2 2020. Further, average yields for
residential properties have sharpened in H1 as a result Prime residential units in the Copperbelt continue
of falling rentals. to range from ZMW600,000 to ZMW3,500,000 and
ZMW650,000 to ZMW1,300,000 in other towns
Prices have remained relatively high in areas such as around Zambia.
Kabulonga , Woodlands and Rhodes Park with land
values ranging between $300,000/acre and
$500,000/acre.
In the medium term, increasing urbanisation and
infrastructure development in the city is set to lead to
increased demand for land in Leopard’s Hill, New
Kasama, Ibex Hill, Roma , Ngwerere and Lilayi with
prices ranging between $20,000/acre and
$70,000/acre.
Key trends Prime Residential Areas Lusaka – Key Facts
The residential market in Location Significant Comments
Zambia continues to be Developments
dominated by self-build Expansion of main
Significant road
projects as a result of the roads.
infrastructure
very high interest rates and Three New
Kabulonga/ improvements, further
the long term growth of the shopping Malls.
Woodlands enhancing it’s established
market is supported by new Solar street
position as one of Lusaka’s
roads opening up new lighting
most popular areas.
neighborhoods around the installation
city under the ongoing Significant high Establishing itself as one of
Lusaka Decongestion Project end residential Lusaka’s main areas for
development. high end residential away
In H2 of 2017 the Central Leopards Hill/State New mall under from the centre of the city.
Bank of Zambia reduced its Lodge construction.
benchmark interest rate to Destination retail
10.25% and in H1 2020 the Solar street
central bank interest rate lighting.
reduced to 9.25%. mortgage New Medland Has continued to move
rates range between 20%- Hospital further towards a mixed-use
30% Rhodes nature and becoming
Park/Longacres Standard Lusaka’s primary mixed-use
An increased supply of Chartered Bank area. Land values remain
residential units onto the new Head Office high.
market together with lower Roma leading to Upgrading of This area has made
demand has led to a Ngwerere Zambezi Road and significant strides towards
softening of the market and a Ngwerere Roads. being one of Lusaka’s new
reduction in rental levels and Prime residential sought after areas offering a
this looks set to continue for small, medium variety of long term property
throughout 2020. and larger sized development opportunities.
plots
Affordable housing demand
continues to persist with the
rise in young professionalsRetail Market Review –H1 2020
Lusaka Copperbelt and other towns
The COVID-19 pandemic has had an adverse effect The Copperbelt is naturally dominated by the mining
on the retail sector resulting in some tenants sector. Despite the COVID-19 pandemic, copper
vacating space or negotiating short term rental prices have remained stable over the last one year
discounts. Retailers such as SPAR have closed down having a ripple effect on the local economy leading to
all their corporate owned stores in Zambia while a more resilient retail sector.
Food Lovers closed down it’s East Park supermarket.
Malls such as Mukuba in Kitwe, have continued to
Smaller outdoor designed neighbourhood retail trade fairly strongly attracting shoppers from across
centres have continued to gain preference over the border from the DRC, where there is still very
larger malls. This has been attributed to ease of limited formal retail.
accessibility and convenience factors.
Key Trends ZMW/USD Exchange Rate Kwacha
20
Logistics and supply for 18
regional retailers has been 16
severely disrupted by COVID 14
-19 and in certain cases , 12
created a shortage of stock. 10
However, this has created an 8
opportunity for local food 6
producers to supply retail 4
supermarkets. 2
0
Whilst there are severe
pressures on the retail sector
, shopping is still a key
Source: Knight Frank Research/ Macro bond
lifestyle habit and malls a
major destination in Zambia
for the majority of the
population , with little online
trade options. Zambia Consumer Spending(% Change Y/Y)
Food and non-alcoholic beverages - Total Clothing and footwear - Total
Pick n Pay is in the process
of acquiring some of the Household appliances
former SPAR supermarkets
35.0
in Lusaka locations such as
Foxdale , Northrise and Twin 30.0
Palm and is opening a new 25.0
900 sq. m Pick n Pay at the
20.0
Great North Business Centre
along the Great North Road 15.0
less than 1km from the north 10.0
end roundabout with Cairo
Road. 5.0
0.0
-5.0
-10.0
-15.0
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Source: Oxford EconomicsAgriculture Review –H1 2020
Impact of COVID-19
Why Invest in Zambian Agriculture
At the start of H1, Zambia announced a record
maize crop yield of 3.39m tonnes, one of the best ▪ Zambia is often viewed as a safe haven due
in the last twenty years ,mainly due to above to it’s relative stability – attracts private
average rainfall around the country during the and institutional investors
October – March 2019 / 2020 season and an ▪ Over 40 million hectares of the country are
increase in farmers growing maize. classified as having medium-high potential
for agriculture production; only 1.5 million
Disruption in the supply of food has negatively hectares are cultivated annually.
impacted on inflation causing a rise in prices in the ▪ Corporation Tax for agriculture is only 10%
shops as Zambia is landlocked and highly compared with 35% for other sectors.
dependent on food imports. However conversely ▪ Various traditionally grown crops include
the virus has had a positive impact on small scale maize, wheat, other grains and other higher
farmers growing vegetables and herbs, supplying value crops such as nuts/citrus are growing
the local market to fill the gap in the market. in importance.
Key Trends Community Mobility Index (Grocery Visits)
Zambia
It is too early to tell the 25
effect of COVID-19 on values 20
for farmland but to date
15
values have remained stable
10
and the sector resilient.
5
The ongoing road 0
infrastructure improvements -5
around the country , under -10
The Link Zambia 8,000 -15
project , support the growth -20
of the sector for local supply
-25
and demand , and assist
-30
with better logistics and the 15/02/2020 15/03/2020 15/04/2020 15/05/2020 15/06/2020
opening up of farming areas.
The aim is to construct an Source: Knight Frank Research, Macro bond
efficient road network in
Zambia with international
highways linking Zambia to
South Africa, Zimbabwe,
Mozambique, Malawi,
Tanzania, the Democratic
Republic of Congo and
Namibia
A key long term trend is the
high population growth ,
approximately 2.9% pa and
increasing urbanisation ,
driving the demand for food
and supporting the positive
outlook of the agricultural
sector.
Kalangwa EstateZambia Real Estate Market Outlook 2020
Macroeconomic Outlook Residential Market Agricultural Market
A significant slow down in self Medium to longer term opportunities
The Central Bank of Zambia build projects which is the main combined with short term resilience in
reduced its benchmark interest rate type of housing development in the face of the COVID-19 pandemic,
by 225 bps to 9.25% in order to Zambia driven by high interest driven by average annual population
stimulate the economy and reduce rates and supported by improved growth of 2.8% , increasing urbanisation
bank lending rates in the midst of road networks opening up new , a growing small scale farming sector
the COVID -19 pandemic effects . areas with better access. and an established commercial farming
sector, better road infrastructure and
In H1 2020 Zambia’s credit rating The market is expected to remain improvements in irrigation techniques.
was lowered to CCC from CCC+ by tenant driven .
S&P Global ratings and assigned a
negative outlook, citing missed
interest installment on an existing Retail Market Alternative Real Estate
debt and in the latter part of H1 the Sectors
Zambian government hired Lazards
A difficult time for retailers and
to advise on the foreign debt. Whilst COVID-19 has severely slowed
landlords as a result of the
the growth of the education sector, as
unpredictable COVID-19
The IMF forecasts growth to schools and universities were forced to
pandemic, Kwacha devaluation
rebound in 2021 to +2.3% close , it remains a key opportunity for
and higher inflation leading to
property investment in the long term.
pressure on rentals and more
Office Market vacancies subject to short term
renegotiations on terms. The pandemic has also laid bare the
Continued adjustment of rentals frailty of the healthcare sector and the
as the market adapts to match the need for substantial and planned
lower demand from tenants in investment in clinics and hospitals
order to lease surplus space. around the country, at all levels.
Rentals are expected to further
stabilize in H2 2020.
KEY CONTACTS
Mumba Kapumpa Jr, MRICS Chalwe Silwizya, MRICS
Timothy D Ware, MRICS
Manager - Advisory Surveyor – Advisory & Agency
Managing Director
mumba.kapumpa@zm.knightfrank.com chalwe.silwizya@zm.knightfrank.com
tim.ware@zm.knightfrank.com
M +260 979 662 150 M +260 961 873 345
M +260 966 751 203
Knight Frank Research Reports are Important Notice
available at © Knight Frank 2020 - This report is published for general information only and not to be relied upon in any way.
Although high standards have been used in the preparation of the information, analysis, views and projections presented
Knight Frank.com /Research in this report, no responsibility or liability whatsoever can be accepted by Knight Frank for any loss or damage resultant
from any use of, reliance on or reference to the contents of this document. As a general report, this material does not
necessarily represent the view of Knight Frank in relation to particular properties or projects. Reproduction of this report
in whole or in part is not allowed without prior written approval of Knight Frank to the form and content within which it
appears.
Knight Frank Zambia Limited is part of Knight Frank LLP. Our registered office is at No. 3 Chikwa Road, Lusaka,
Republic of Zambia.You can also read
